Consumer, corporate buying boost Microsoft revenue

Citing increased demand for its products from both consumers and corporate buyers, Microsoft on Thursday reported a 19% year-over-year revenue jump but lower net income due to equity compensation costs for its second fiscal quarter.

Citing increased demand for its products from both consumers and corporate buyers, Microsoft on Thursday reported a 19% year-over-year revenue jump but lower net income due to equity compensation costs for its second fiscal quarter.

Revenue amounted to $10.15 billion, up from $8.54 billion in the year-earlier period. In October, the software vendor estimated second-quarter revenue would be between $9.7 billion and $9.8 billion.

The software vendor also slightly upped its revenue estimate, but lowered its earnings estimate, for its full 2004 fiscal year, which ends June 30, 2004.

Net income for the quarter ended Dec. 31 came to $1.55 billion or $0.14 a share, including equity compensation expenses of $2.17 billion, or $0.20 a share. In the year-earlier quarter, Microsoft reported net income of $1.87 billion, or $0.17 a share, including various charges totaling $1.26 billion, or $0.12 a share, the company said in a statement.

The earnings beat analysts’ expectations. Excluding the compensation expenses, Microsoft earned $0.34 a share for the quarter. Analysts polled by Thomson Financial had been expecting $0.30 a share.

Microsoft attributed the higher than expected revenue to consumer and corporate demand for PCs that exceeded its expectations, resulting in double-digit sales growth for Windows XP and Office products. In the quarter, the corporate IT market began to show signs of a recovery, with increased demand for both desktop and server products, Microsoft CFO John Connors said in the statement.

As a result of increased sales, Microsoft now expects its full 2004 fiscal year revenue to be between $35.6 billion and $35.9 billion. That is up a bit from the previous, increased estimate of full-year revenue between $34.8 billion and $35.3 billion that the company gave in October.

Microsoft slightly lowered its full-year earnings per share guidance, which it had increased in October when it announced its first-quarter results. The vendor now expects fiscal 2004 earnings per share to be between $0.82 and $0.83, including equity compensation expenses of about $0.35. In October, it estimated 2004 earnings per share between $0.86 and $0.88.

For the quarter ending March 31, Microsoft expects revenue to be between $8.6 billion and $8.7 billion and earnings per share between $0.23 and $0.24, including equity compensation charges of about $0.05, the company said.